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Dazzled by wealth and big talk, three cricket stars poured a fortune into a property scheme. Now they are fighting in the courts to recover their money. Anne Lampe and Jonathan Chancellor report.

High-flying entrepreneur Kovelan Bangaru has become the talk of the town in just 12 months. His audacious purchase of the two "sky houses" in Sydney's latest wave-shaped high-rise, The Cove, in the Rocks, started the ripple. Next it was his extravagant high-tech penthouse fit-out, complete with a dining floor that revolves every 30 minutes, ensuring all 12 diners enjoy the panoramic 43rd floor views. He then caused another stir by spending $1 million on a super-luxury Mercedes-Benz Maybach. The biggest splash came last week with a report, subsequently denied, that one of the penthouses in The Cove had been sold to Virgin airlines boss Sir Richard Branson for $16 million.

Not content with conquering Sydney, Bangaru envisages his next acquisition as the 55th floor penthouse in the Trump Grande, at Sunny Isles, South Florida.

But now, as the result of legal action to freeze assets by three of Australia's biggest cricketing names, fast bowler Brett Lee, his all-rounder brother Shane and recently retired batsman Michael Slater, his empire is under Federal Court scrutiny.

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The cricketing trio are suing Bangaru for recovery of their funds - a total of $1.8 million they lent in a residential property financing and development venture that went sour - under the provisions of the Trade Practices Act.

Their investments were made after drawing down equity in their own Sydney homes and investment properties. They claim this was done on the advice of Bangaru, wearing his mortgage-broker hat as an arranger of low-doc loans - which charge higher interest in return for waiving requirements that borrowers provide documentary proof of assets and income.

Brett Lee ploughed $981,000 into the scheme, brother Shane invested $413,723 and Slater handed over $545,946, of which he has since recouped $100,000.

"It's only very recently that we have discovered the aspect of the matter which appears to demonstrate dishonesty," the cricketer's barrister, Alec Leopold, told Federal Court Justice Peter Hely last week.

But the observation by the judge that "something funny seems to have gone on" was rigorously disputed by Bangaru's barrister, Jonathan Simpkins, SC.

Arriving with just $1600 from South Africa seven years ago, after following a six-year maze through immigration, former insurance salesman Bangaru has had a quiet but spectacular, rise in fortunes.

Born in Pietermaritzburg, the 37-year-old immigrant's first recorded Sydney venture was directorship of the Portofina Gourmet Foods outlet at the Greenwood Plaza, North Sydney, in the mid-1990s, then a directorship at the Getaway Travel Network.

Michael Slater (pictured) and Brett Lee were wined and dined by the flamboyant Kovelan Bagaru, who offered help with their finances. Photo: AP/Rob Griffith

Bangaru lives with his wife, Shamendree, and their two children at a Milsons Point apartment bought for $1.63 million in 2002, where they moved after departing their Forum, St Leonards, apartment.

The little-known Bangaru first hit the headlines last August when he spent $5.9 million buying the empty shell of one of the two penthouses in Grocon's The Cove development.

Earlier this year, it was announced he had bought the adjoining $5.65 million penthouse, securing possession before its upcoming October settlement so as to start the preliminary fit-out work. Most recently, Bangaru reportedly purchased a small fourth-floor unit to be added to his initial penthouse as the butler's quarters.

As for last week's report Branson had paid $16 million for the nearly complete 43rd floor penthouse, "It was more than $16 million, a tad over," Bangaru said of the sale, without confirming the report that Branson was its buyer.

"The revolving dining room floor made me $2 or $3 million more."

But Branson, tired of reports he had splurged on Sydney property, immediately denied the report, describing it as "complete and utter bollocks".

At $35,000 a square metre, the reputed sale price far exceeded Sydney's previous record of $28,000.

Bangaru has reportedly outlaid $686,000 on smart-home technology at The Cove penthouse. Among the high-tech gizmos, doors open and close using retina scans, Japanese-designed toilets, costing $14,000 each, determine whether a man or a woman is approaching, and raise or lower the seat accordingly. There are sensors in the master bedroom that detect when someone is getting out of bed at night, automatically bringing up floor lighting on that side of the bed, leading to the toilet. There's even an iPaq hand-held computer that ensures the bath will never overflow.

"It is the best of the best," Bangaru said last week. "I didn't think it was over-capitalised because I was going to live there."

It is not just lavish property accoutrements that capture his imagination.

Bangaru took possession of the Mercedes-Benz Maybach last June after seeing one in the window of the Harrods department store in London.

Declaring it his 129th Mercedes - which almost puts him in the league of having his own motor trading licence - his financed purchase involved the return of his CL600 Coupe.

Bangaru reportedly paid $50,000 to have the Maybach airfreighted to Australia from the German factory.

It is often parked on Knox Street, Double Bay, where Bangaru sits on a Sunday afternoon in the nearby DB's coffee shop watching the pedestrians admire his car.

It was early 2003 when Michael Slater and Shane Lee were introduced to Bangaru by Charles Hoatson, the director of Brett Lee's sports management company, Insite Organisation. Hoatson's wife, Jo Allerding, was working at Bangaru's Streetwise group of development and broking companies.

Bangaru showed a keen interest in their cricket, then their personal and financial lives. Slater found they shared interests in property and luxury cars.

Brett Lee was able to briefly borrow the developer's Porsche. Hosting dinner at Ribs and Rumps, Bangaru bragged - Donald Trump-like - that his empire made $150,000 a day.

At the urging of Bangaru, Slater and Shane Lee became ambassadors for Streetwise - with the prospect of featuring on brochures, in advertising promotions and on for sale signs for the 300 to 400 homes and apartments he develops each year.

They allege that Bangaru talked to Shane Lee and Slater about their financial positions and the money he could make for them if they invested with him in property development.

They told him how much equity they had in their properties and gave him the green light to refinance their mortgages, allowing them to invest with him through a joint venture company.

Slater was the first to invest in land designated as being on Sanctuary Lakes, the $800 million resort-style Melbourne estate built around a Greg Norman-designed golf course.

Bangaru, it is claimed, suggested Slater's funds would buy four or five blocks, to be developed and sold at a substantial profit. The formal paperwork was little more than a precis, called a deed of investment joint venture.

Shane Lee, who declared his desire to be a risk-averse investor, also decided to invest in the golf course blocks after a project analysis report was produced showing that the purchase of five properties for $1.15 million would yield a profit of $148,296.

Shane Lee says he first met Bangaru in December 2002 at the coffee shop underneath Bangaru's plush Clarence Street office suite. He also attended Bangaru's marble-floored offices, set out in accordance with feng shui principles, in early 2003 for drinks on several occasions. There he was impressed by Bangaru's tanks of exotic tropical fish.

In April 2003, $413,733 was transferred from Shane Lee's account to Streetwise Administration, again with little formal detail on the specifics of his 24-month investment.

The documents before the court indicate no joint venture company had been established and none of the designated properties were in the names of the cricketers or in the name of a joint venture company. The interest payments on their refinancing have periodically been in arrears, despite the undertakings that Streetwise would be responsible for the repayments.

The proposal put to Brett Lee by Bangaru in July 2003 differed from that put to his brother and Slater. As outlined on a whiteboard in Bangaru's office, it involved a residential equity loans company building 200 houses and using Brett Lee's high profile to market them with a motto "Brett Lee can help people buy their home, deposit free".

Lee would invest $1 million in return for a 15 per cent share.

Bangaru's initial memorandum of understanding, dictated to capture the spirit of the arrangement, was signed by Lee on August 22, 2003, subject to ratification by the Australian Cricket Board given the intended use of Lee's image. Lee indicated that Tim Ebbeck, the chief financial office at software supplier SAP, would be nominated as his representative on the joint venture board.

Subsequently, Lee signed unread documents presented to him by Streetwise's David Steer, not appreciating they were allowing the refinancing of his own property holdings and the drawdown of $981,000 to the Bangaru group of companies.

Lee was off playing cricket in Bangladesh last October when his manager, Neil Maxwell, opened his mail and found that almost $1 million had been drawn down from his account.

Bangaru arranged for a company called Equity Residential to be incorporated with 1000 shares, of which 150 were set to be allocated to Lee.

"The investment opportunity was presented and it has not developed the way both parties understood that it would, and I suppose there is an interest in trying to understand exactly where the funds are," Neil Maxwell says.

"He has accessed the money prior to agreed things being delivered.

"Mr Bangaru has been less than forthcoming and open with information relating to the investments," says Maxwell, whose own investment in Bangaru's Seaforth project ended in dispute with a $150,000 refund last November.

Hoatson, too, had his own falling-out with Bangaru, after Insite unsuccessfully sought $80,000 in fees.

There were months of unsuccessful personal pleas and email requests seeking details on the joint ventures, then negotiations for the return of their $1.8 million funds, but the cricketers remained unsure as to where the funds had been dispersed.

The cricketers obtained initial injunctions in July, freezing assets in Streetwise Group Pty Ltd, Streetwise Property & Projects and Colosseum Nominees, and blocking dealings on its property, including blocks at Sanctuary Lakes in Victoria and at Shell Cove, on the NSW South Coast.

Last Friday, Federal Court Justice Peter Hely froze dealings on three more properties identified as having possibly been allocated to the cricketers.

Bangaru had been ordered to file an affidavit detailing where the cricketers' money was now, but it was not presented - running the risk that he could now be found in contempt of court. The court was presented with an affidavit from Streetwise's administrator, Trevor Downs, and accountant, Kelly Gower, filed on behalf of Bangaru's companies.

It gave some details on where Shane Lee's and Slater's money had been allocated, but lacked specifics on the whereabouts of Brett Lee's $981,000.

Justice Hely was told the Downs affidavit explained that Shane Lee and Slater's money went into a bank account of a Bangaru-related company, which was used to reduce that com-pany's overdraft, rather than to specifically purchase properties.

Downs maintained certain previously purchased properties had been "allocated" to Lee and Slater by Bangaru.

Expenses had been charged to the accounts of the two cricketers, including airfares, site management fees and development costs for the properties although little or no development has occurred on the vacant blocks.

But Bangaru's barrister, Jonathan Simpkins, SC, insisted all moneys had been advanced in line with the agreement.

"The agreements probably are in a more summary nature than your Honour might anticipate," Simpkins conceded.

But the cricketers' barrister, Alec Leopold, claimed the detail in the affidavits was more than just deficient.

"The material which we have seen in the affidavits demonstrates misapplication of all of the funds, almost down to the last cent.

"By that, I mean that the use to which these funds was put was quite alien to the intention and purpose demonstrated by the communication between the parties prior to the moneys being parted with," Leopold said.

Brett Lee's money appeared to have been disbursed by way of inter-company loans rather than going towards capitalising the promised equity residential venture, he told the court. Some $100,000 was transferred to a Bangaru-related company which reduced that company's overdraft, he said.

Leopold said a further $400,000 had been transferred to another Bangaru-related company, Cherrington (Asia Pacific) Pty Ltd, which was involved in a pipeline drilling project in China.

There was also a cheque drawn for $475,000, described as a "house cheque", he said.

The matter is back in court on September 16.

Bangaru declined to talk to the Herald about the cricketers' claims.

His solicitor, Tony Hartnell, said that the matter was before the courts, that the evidence was very detailed, involved accounting and that it was not an easy thing to argue about.

The case is not the first to be brought against Bangaru. In 2002, there was a judgement for misleading and deceptive conduct against Bangaru's company, Eaton Vance Pty Ltd.

The company was ordered by the NSW Consumer, Trader and Tenancy Tribunal to repay a client $25,000 in professional fees paid by a first-time investor after finding breaches of the Fair Trading Act.

"The applicants were first canvassed at home and representatives of Eaton Vance entities spent time in their home late at night, pressuring them to enter an agreement which represented considerably more financial commitment than had the proposal with which they were first presented," the tribunal said in its judgement.

"The tactic of refusing to show the property until the applicants had agreed to buy it was an unfair tactic in the circumstances.

"It strongly discouraged, if not precluded, the applicants from seeking independent advice despite the statement contained in the Eaton Vance literature that they were free to do so.

"The agreement entered into was in very small print and difficult to read, particularly for people whose first language was not English."

The tribunal found the mortgage broking company had also made false representations that it had been endorsed by the Queens-land Fair Trading minister and professional associations for their financial and investment services.